So it sounds to me like Hasbro does take DDI seriously and is watching it closely for signs of success or failure. It seems that if WoTC doesn't get DDI working and generating a substantial revenue (based on expectations as mentioned above) they could be in trouble with Hasbro. One can probably assume the sales from the release of 4E were what was expected, but if the new system doesn't "convert" enough customers over the long term (I think it looks about 50/50 right now) and DDI doesn't live up to expectations, WoTC will be in trouble. They really need to get DDI running and have it be a success.

My guess is that someone (maybe that guy who was doing most of the speaking, or maybe his minions) gets a whole mess of reports detailing various things that he (or his minions) boil down into the annual report.

He possibly doesn't even know what D&D IS let alone that they own it and sell it. He might not even know there's a department called WoTC, or even if he does he doesn't really know the function.

Probably the only reason that card game got a mention is because it is doing well in Japan, and therefore popped up in a "products doing well in foreign countries" report that he (or his minions) ran in order to show how well they're doing over seas.

All their annual reports never really reported much on anything other than WotC as a whole.

I did a back of the envelope calculation once and I put D&D as contributing about $30 million in sales in 2007 (give or take about $5 million). When I looked at the year 3E came out, I got about $40 million. These are purely guesses, but with Hasbro's total annual sales of $4 billion, D&D represents less than 1% of the company revenue and WotC is less than 5%.

that could be right. i think it might be smaller though. magic is by far the greater share of wotc's business. here are some figures from 2006 and back a few years...

My guess is that someone (maybe that guy who was doing most of the speaking, or maybe his minions) gets a whole mess of reports detailing various things that he (or his minions) boil down into the annual report.

He possibly doesn't even know what D&D IS let alone that they own it and sell it. He might not even know there's a department called WoTC, or even if he does he doesn't really know the function.

Probably the only reason that card game got a mention is because it is doing well in Japan, and therefore popped up in a "products doing well in foreign countries" report that he (or his minions) ran in order to show how well they're doing over seas.

Wrong! I am almost certain he knows what WotC is and what their main brands are. I work as a financial analyst; I listen to conference calls like this all the time. Any good manager understands his business and product lines and (hopefully) knows how to leverage them to maximize shareholder value.

The fact that WotC was not discussed in any significant capacity has nothing to do with ignorance by management. I do not believe that WotC is a major value driver for Hasbro and therefor was not subject to analyst questioning.

He possibly doesn't even know what D&D IS let alone that they own it and sell it. He might not even know there's a department called WoTC, or even if he does he doesn't really know the function.

I got the impression that the guy was far more competent than that. You don't get into that sort of position in a company as large as Hasbro unless you know your stuff... actually unless you really know your stuff. Your mileage obviously varies.

Best Regards
Herremann the Wise

Last edited by Herremann the Wise; Tuesday, 29th July, 2008 at 11:36 PM.

Imagination is a quality given a man to compensate him for what he is not,
and a sense of humor was provided to console him for what he is.Oscar Wilde

He who is certain he knows the ending of things when he is only beginning them is either extremely wise or extremely foolish; no matter which is true, he is certainly an unhappy man, for he has put a knife in the heart of wonder.Tad Williams

Wrong! I am almost certain he knows what WotC is and what their main brands are. I work as a financial analyst; I listen to conference calls like this all the time. Any good manager understands his business and product lines and (hopefully) knows how to leverage them to maximize shareholder value.

The fact that WotC was not discussed in any significant capacity has nothing to do with ignorance by management. I do not believe that WotC is a major value driver for Hasbro and therefor was not subject to analyst questioning.

i agree. with my corporate background as an upper level sales exec in NYC, and also as an attorney, i can tell you that all that the quote above is dead on. every year each division gets a sales goal and has to set a plan in place to achieve that goal.

wotc obviously decided they were going the online route to drive revenue both short and longterm. some high level executive or marketing group probably read all about the social networking phenomenon and decided that they could sell their plan to upper management, especially with those buzzwords.

rpg book sales are simply now only an entry point into a long term online revenue stream, much as software is for mmorpg's.

the books in and of themselves are no longer the end product. pen and paper gaming is no longer the goal of hasbro's dnd product line. that end goal is not a money maker, especially since someone about 12 years ago bought into the latest buzzword/theme of the time, open source, and decided to let everyone play in the sandbox and take some of the revenue stream. sure it may have kept the product alive short term, but long term it did not give the company an acceptable revenue stream.

so wotc now sets out a plan that would take 18 months to 2 years to implement, which is smart, since that buys them time to show a return on the investment. it also makes the company look progressive and hip, while at the same time they are not taking too many risks because "everyone is doing it, its the latest thing." (see open source, above)

in the meantime, the books are ready to go, but the 2 online initiatives are not. One is up and running but running poorly. Hasbro invested millions into the initiave, and looking at current market conditions, decides to pull the plug on it. it's always better to pull the plug on something you know will lose money in the future, in order to show that you are taking action to remedy a problem.

note how they closed the wotc stores even though they had projected earnings from them and budgeted for those earnings. this forced them to talk about the shortages in the revenue streams from wotc, but also be able to tell the financial advisers that they are taking some constructive action to fix the issue.

note also the timing of the announcement to close gleemax. i guarantee you that the decision didn't hapen overnight and get anounced the next day. these decisions are weeks if not months in the making. the numbers from all divisions were due several weeks in advance of the investor meeting so they could be filtered up to upper management for the spin masters to edit for the purpose of the meeting.

this means they knew they were closing gleemax several weeks ago. they held out and didn't mention it during the call. instead they announce it a few days after, so there were no questions about it.

the cover up i think speaks volumes about how bad it would look if the main revenue increasing initiative for a whole operating group was closed down.

anyhow they just pulled the plug on the main part of the online initiative, and need to get some income in fast. no new products have been released for about a year. your consumers have had a chance to look at other product lines. former business partners (paizo) are setting up to go into business against you, using your own product to do so (see open source, above).

you know your book release is tied to the insider release in order to maximize the "BAM!", as well as the revenue. you sold upper management on a whole new way to play rpg's. to release just the books without the online component would be a failure of the plan. yet you need to have some income, especially before the upcoming quarterly meeting.

what do you do? have the marketing department make up some bullsh** about market conditions no longer supporting the gleemax vision. say that it would be in the best interests of the company to pull the plug now. say that due to competitive threats you want to roll out the new 4th edition books now, even though you dont have the acompanying insider component. say that the market research as well as reviews of the products by the playtesters and panel discussions justify the timing of the product release, and that it would ultimately help with the online initiative longterm by generating buzz as well as game familiarity now. have marketing do some BS research to justify that position. bullsh** about the delay for insider, saying it is projected to be out soon after the book release. talk in fluff and generalities loaded with buzzwords and new proactive plans and initiatives that the higher level execs can use in their meetings to explain away the situation.

thats why i think the gleemax thing is a bad sign. a sign of a sinking ship. once you start hacking away at the main components of the plan, you are just buying time, throwing the heavy weight overboard, but not stopping the sinking of the ship.

if insider does not get up and going soon, and if it doesn't blow people away and get them signed up, i expect that the pen and paper aspect of dnd will no longer be supported within the next business cycle-- 12-18 months. they'ss still keep the brand itself and make money off of the licensing rights, as long as they aren't able to make more money off it it by selling it. i doubt though that paizo or any third party publisher would have enough money to buy the dnd IP though. i predict though that based on the failure of gleemax and every other electronic initiative they take on, that insider will fail and that the dnd brand will make money for hasbro through licensing and a much slimmed down pen and paper publishing schedule.

perhaps karma for closing down the ftp site greyhawk.stanford.edu.

for purposes of projected revenue streams, look at it in terms of software and mmorpg's. the books are the software. the mmorpg is insider. you make your income projections based on both. if only one comes through, and the smaller one at that, your chances of keeping your position as head of wotc is looking slim. think about it this way---how much does the phb, mm and dmg cost? 90 bucks? if they cost that much, wotc will go the way of tsr.

most every person who purchases the three core books are expected to earn wotc $90 plus $120 plus $120 plus $120, assuming 10 bucks a month subscription and someone subscribing to insider for a few years.

now tell me, with those projected numbers in mind, with those budget demands placed upon your company, how much does it matter that you made $90 per customer when you were projected to make $240 the first year, and that you just dumped millions of dollars into a money pit called gleemax which will never be recouped?

Along a similar vein, Wizards of the Coast was conspicuously absent from San Diego Comic Con this year. A person at the Hasbro booth said they were gearing up for Gencon. I have been attending SDCC since about 1991 and I can't remember D&D not being there.

My opinion is that there are real concerns to be had with the health of the brand.
I feel that if 4th edition and more importantly (I believe) Insider doesn't perform to Hasbro expectations they will probably divest themselves of the brand.

As we have all seen this can be good and bad.

Personally, I think the Gleemax closure and the fact that the Character Creation portion of the Insider are really BAD signs.

Thanks for the info. Cool to see everyone's reactions.

However, until just last month WotC wasn't even going to GenCon "official" either. I think this has more to do with the lack of getting the product up the way they intended and were scrambling to put the polish on the apple. Between the two cons, Comicon or GenCon, GenCon is just the larger of the two in terms of D&D and role-play, regardless of the actual media coverage or attendance - playing to a bunch of comic collectors isn't necessarily playing to a group of gaming geeks and vice versa. Given the choice, they probably went with what they knew would make the most sense financially.

That said, I think that the next 2 quarters profits of WotC are going to be less than expected due to the large cash suck that Gleemax, DDI and M:tG v3 have been to the company as a whole, regardless of the record sales of 4e and related products. Things look pretty interesting from a business standpoint. Somebody make some popcorn.

"I may be unconscious, but at least I still look good!" - - Me (at the Halfling Musketeers game GenCon '06)

On one hand, taking away their weapons is a dead giveaway that they will need them. On the other hand, by the time conflict starts the players will already have opened the rulebooks and found the parts that deal with bare-handed combat, performing disarm moves, and using improvised weapons. Players may blunder through dialog with shocking ineptitude, forget the name of the country they are in, or get confused about which side they are on, but once it comes time to roll for initiative they all turn into Sun Tzu. - Shamus Young DM of the Rings